It occurs because both the buyer and
seller of these financial assets believe that the transaction is good for them. Those with money and credit provide
it to recipients in exchange for the recipients’ “promises” to pay them more. So, for this process to work well,
there must be large numbers of capable providers of capital (i.e., investors/lenders) who choose to give money
and credit to large numbers of capable recipients of capital (borrowers and sellers of equity) in exchange for the
recipients’ believable claims that they will return amounts of money and credit that are worth more than they
were given. While the amount of money in existence is controlled by central banks, the amount of credit in
existence can be created out of thin air – i.e., any two willing parties can agree to do a transaction on credit –
though this is influenced by central bank policies. In bubbles more credit is created than can be later paid back,
which creates busts.